Pre-market futures for the major U.S. indexes are up nicely at this hour, buoyed by sunny news items from ADP ADP private-sector payrolls and a fresh crop of Q4 earnings results, on what is amounting to record cold temperatures in much of the country — especially the Midwest — for the final two days of January. We also anticipate new comments from Jay Powell when the Fed Chair speaks later today.
The private-sector payroll numbers from ADP this morning — a precursor to Friday’s big non-farm payroll numbers and Unemployment Rate from the Bureau of Labor Statistics (BLS) — are by now routinely excellent: 213K for the headline, well above the standard expectation of around 180K, remains roughly double what we need to support workforce retirees in this country’s labor market. December’s headline was revised down by 8000 jobs, but still to a highly impressive 263K. This remains historically outstanding jobs growth.
Goods brought in 68K versus Services’ 145K, but Goods last month took a higher percentage of new employment overall. Medium-sized companies (between 50-500 employees) led the way once again, with 84K positions filled in December. Large and Small companies came in pretty much even, at 66K and 63K, respectively. For those looking for the partial government shutdown having a negative effect on the private sector, you’ll need to look elsewhere.
As per typical, the Education/Health Services sector brought the highest number of new jobs, 38K, followed by Construction at 35K, Manufacturing 33K, Leisure/Hospitality 31K and Trade/Transport 13K. Perhaps the trade tariffs are helping drive domestically produced goods, which would account for almost all of the upward surprise.
Currently, expectations for the BLS report Friday are for 170K December job gains. This would follow one of the biggest upside surprises of any economic data we have seen for a long time: 312K non-farm payroll jobs reported a month ago. The Unemployment Rate ticked up to 3.9% as more citizens sought employment in such a hot labor market.
Q4 Earnings Roundup
Boeing BA) made a strong showing this morning with big Q4 results ahead of today’s opening bell: $5.48 per share was well beyond the $4.52 in the Zacks consensus. This was on revenues of $28.34 billion, which outshone the estimated $26.65 billion for the Zacks Rank #1 (Strong Buy) company. According to CNBC’s Phil LeBeau this morning, increased production of Boeing’s 737 jet helped boost free cash flow in the quarter, reportedly up to roughly $2.5 billion.
This also marks the first fiscal year where Boeing has generated revenues north of $100 billion. Pre-market trading has propped the stock up 6.5% so far.
McDonald’s MCD) also outperformed expectations in its Q4 report: $1.97 per share beat the Zacks consensus by 7 cents, while quarterly sales of $5.16 billion narrowly topped estimates. Overall comps rose 4.4%, also higher than expected, though U.S. comps were in line. Operating income was down. Shares, which had sold off initially, are now flat ahead of the opening bell.
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